The International Monetary Fund (IMF) has warned Nigeria over its proposed $5 billion borrowing arrangement with a United Arab Emirates-based lender, First Abu Dhabi Bank First Abu Dhabi Bank, citing transparency and complexity concerns.

The IMF resident representative in Nigeria, Christian Ebeke, said the structure of the proposed financing, a derivatives-linked arrangement, is often opaque and difficult to assess in terms of true cost and risk exposure.

He noted that such transactions typically lack full transparency, making it harder for governments and markets to fully understand the contractual obligations involved.

Ebeke advised that Nigeria could instead consider more traditional funding options such as Eurobond issuances or concessional borrowing, which are generally more transparent and widely used in sovereign financing.

The borrowing plan forms part of President Bola Tinubu’s broader external financing request, which was approved by the National Assembly. The proposal includes a structured total return swap arrangement valued at up to $5 billion.

Nigeria currently carries a public debt stock estimated at $110.3 billion, and the government has said the new borrowing would support budget implementation, infrastructure development and debt refinancing.

The IMF has consistently cautioned emerging economies about complex derivative-based financing structures, arguing they can increase fiscal risks if not properly managed.